Do you want to buy a house in the new year? Here’s how to increase your chances of success with a mortgage.
Will 2022 be a better time to buy a home than 2021? It’s hard to say. This year the housing stock has been extremely limited and house prices have been high. These trends could persist into the new year, making it another difficult time for buyers.
But if you’re up to the challenge of buying a home, it will help put you in the best position to qualify for a mortgage. Here are five tips you should know.
1. Check your credit report
Your credit report is a summary of your borrowing history and habits. This is something mortgage lenders will take into account when deciding whether you are a viable loan candidate or not. Take a close look at this report and make sure there are no red flags like overdue debts in your name. If so, it is worth working on resolving these issues before going ahead with a mortgage application.
Likewise, you’ll want to make sure that your credit report doesn’t contain any errors (like past due debts you’ve since paid off) that could work against you. If you find them, you’ll want to correct them before you apply for a home loan.
2. Find out your real credit score
Many consumers are surprised to learn that their credit reports do not show their actual credit score. To get this number, you may need to log into your bank or credit card account. Or, you might have to pay for it.
Either way, it’s important to know what your credit score looks like and to make sure you’re happy with that number. The higher it is, the more likely you are to not only get approved for a mortgage, but also get a competitive mortgage rate on that loan. In fact, if you are able to get your credit score between 700 and 700 (or higher, of course), you will probably get the best rate a lender offers.
3. Reduce your debt
The more debt you have, the more a lender may be reluctant to grant you a mortgage, especially if that debt eats up a large chunk of your income. You may want to consider paying off some of your debt before you apply for a mortgage. And if you’re going to do that, focus on credit card debt first. Reducing your credit card debt could not only improve your debt-to-income ratio, but also increase your credit score.
4. Increase your income with a secondary activity
Your income is a factor that lenders will use to determine if you qualify for a mortgage on a home. Since house prices are on the rise, you may need a larger mortgage than usual to buy a home in 2022. This is why it might pay off to increase your income with a business. high school, whether it’s working shifts at a local store on weekends or driving for a hospitality tour a few evenings a week.
5. Take the tour
When it comes to granting mortgages, each lender sets their own rates and closing costs, which are the fees you will need to pay to complete a home loan. It is beneficial to collect offers from a number of different lenders as it might help you get a better deal.
That said, you’ll want to do your rate purchases quickly – ideally within 14 days. Anytime a lender pulls your credit report to see if you are a qualified candidate for the loan, it counts as a serious investigation. Too many inquiries can lower your credit score, making it more difficult to borrow. But if you have inquiries from multiple lenders in the same short period for the same purpose (getting a mortgage), all of those inquiries will be counted as one, thus minimizing the impact to your credit.
It’s too early to tell what the 2022 housing market has in store for us. But if you’re anxious to buy a home in the New Year, it’s worth doing whatever you can to increase your chances of getting a mortgage at a rate low enough to offset the higher prices. high houses with which we start.